Methods Used To Determine Value – Sales Comparison Approach
The "Sales Comparison Approach" is the most commonly used method in determination of market value for single-family residential property. In this approach, the appraiser uses sound, professional judgment to select properties as similar to the subject property as possible that sold as recently as possible. A direct comparison is done between the subject and the comparable sales, sorting out key differences that affect value.
It’s impossible to find two properties that are exactly alike. Even if two homes have the same floor plan, it’s not located on the same land and that alone is a huge difference. The level of maintenance along with other factors also account for how properties differ. Therefore, the key to the "Sales Comparison Approach" is to make market adjustments for pertinent differences between the subject and any or all comparable sales selected.
The appraiser’s opinion of value based on the "Sales Comparison Approach" will most likely depend on the adjusted sales price of each comparable sale. The adjusted sales prices are not averaged. The appraiser will give weight to each comparable sale based on which is the most similar to the subject and therefore the best indicator of value.